T O K Y O, March 14 Three Japanese banks Sanwa, Tokai and Asahi announced a merger today to create the worlds third-largest bank, further consolidating the countrys recovering financial industry.

The three banks said they will set up a joint holding company in April 2001, under which they will swiftly reorganize their retail, wholesale, international, computer systems and other operations.
They will have combined assets of $1 trillion to become the second-largest Japanese bank, and the third-largest in the world.

Sea of Mergers

On Thursday, Germanys Deutsche Bank already the worlds largest confirmed plans to get even bigger by merging with rival Dresdner Bank in a deal to create a global powerhouse with more than $1.2 trillion in assets.

Todays merger is also the latest in a wave of consolidation in the Japanese banking industry, which has been saddled with billions of dollars in irrecoverable loans from a speculative lending boom in the late 1980s and early 1990s.

The move was praised by Prime Minister Keizo Obuchi.

Welcome Moves
Realignment moves among financial institutions, such as mergers and partnerships, are to be welcomed, Obuchi told the Kyodo news agency.

By combining their operations, Sanwa, Tokai and Asahi would be able to increase their sources of revenue and fight off increasing competition as Japan deregulates its financial sector, analysts say.

Among Japanese banks, only the Mizuho Financial Group to be formed out of the merger of Dai-Ichi Kangyo Bank, Fuji Bank, and the Industrial Bank of Japan would be larger.

Current presidents of the three banks will become co-chief executive officers of the new entity, which will be headquartered in Tokyo. The name of the holding company will be decided later, the three banks said.

The share allocation ratio under the holding company among the three banks is yet to be decided, but the ratio between Asahi and Tokai is tentatively set as equal, they said.

Open Alliance
The three banks said they aim to further develop the Tokai-Asahi consortiums multi-regional bank vision to offer new types of financial services, mainly to small- and mid-sized enterprises as well as individuals. For that purpose, Sanwa, Tokai and Asahi said their alliance is open to regional Japanese banks.

Prior to the establishment of the new holding company, the three banks plan to cooperate in such areas as consumer loans, debt collection servicing, defined contribution pension operations, private banking and electronic commerce.

The three banks said they plan to conduct more drastic restructuring steps than those currently projected under business plans submitted separately to the government in March 1999 in return for public funds.

The three banks currently have a combined 37,435 employees and 1,005 domestic branches.